Lenovo 2014 Annual Report Download - page 178

176 Lenovo Group Limited 2013/14 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
27 Provisions, other payables and accruals
(a) Details of other payables and accruals are as follows:
Group Company
2014 2013 2014 2013
US$’000 US$’000 US$’000 US$’000
Accruals 1,359,002 1,327,327 32,904 16,015
Allowance for billing adjustments (i) 1,785,022 1,817,782 ––
Other payables (ii) 3,514,230 3,707,235 3,781 1,400
6,658,254 6,852,344 36,685 17,415
Notes:
(i) Allowance for billing adjustments relates primarily to allowances for future volume discounts, price protection, rebates, and customer
sales returns.
(ii) Majority of other payables are obligations to pay for finished goods that have been acquired in the ordinary course of business from
subcontractors.
(iii) The carrying amounts of other payables and accruals approximate their fair value.
(b) The components of provisions of the Group are as follows:
Warranty Restructuring
Environmental
restoration Total
US$’000 US$’000 US$’000 US$’000
Year ended March 31, 2014
At the beginning of the year 1,054,181 –56,042 1,110,223
Exchange adjustment 3,997 –(2,837) 1,160
Provisions made 898,264 –8,610 906,874
Amounts utilized (812,936) –(5,179) (818,115)
Unused amounts reversed (16,246) –(36,952) (53,198)
1,127,260 –19,684 1,146,944
Long-term portion classified as
non-current liabilities (277,231) –(17,559) (294,790)
At the end of the year 850,029 –2,125 852,154
Year ended March 31, 2013
At the beginning of the year 1,013,864 233 85,952 1,100,049
Exchange adjustment (16,851) (11) (6,992) (23,854)
Provisions made 858,165 31 12,294 870,490
Amounts utilized (814,748) (91) (3,493) (818,332)
Unused amounts reversed (7,390) (162) (31,719) (39,271)
Acquisition of subsidiaries 21,141 – – 21,141
1,054,181 –56,042 1,110,223
Long-term portion classified as
non-current liabilities (279,255) –(54,328) (333,583)
At the end of the year 774,926 –1,714 776,640
The Group records its warranty liability at the time of sales based on estimated costs. Warranty claims are reasonably
predictable based on historical failure rate information. The warranty accrual is reviewed quarterly to verify it properly
reflects the outstanding obligation over the warranty period. Certain of these costs are reimbursable from the suppliers in
accordance with the terms of relevant arrangements with them.
The Group records its environmental restoration provision at the time of sales based on estimated costs of environmentally-
sound disposal of waste electrical and electronic equipment upon return from end-customers and with reference to the
historical or projected future return rate. The environmental restoration provision is reviewed at least annually to assess its
adequacy to meet the Group’s obligation.